Datadog (DDOG) sees "strong" momentum across its three key observability pillars, which includes infrastructure monitoring, application performance and digital experience monitoring, and log management, expanding cross-platform opportunities, Wedbush said in a Friday note.

Building on this, Wedbush said that the company also sees newer artificial intelligence-driven offerings, with Bits AI becoming a growing contributor to growth as its capabilities become increasingly relevant across the entire platform internally and externally.

The company's management reaffirmed its long-term target of 25% operating margins while also highlighting ongoing research & development go-to-market investments at its investor day event, Wedbush said.

"We continue to believe that Datadog is well-positioned to continue gaining share within the growing observability space with elevated usage for its AI cohort across its enterprise customer base," Wedbush said.

The firm maintained its outperform rating with a $190 price target.

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